Val Breit remembers it clearly: the moment she realized what her $42,126 of student loans really meant.
She was sitting in her childhood bedroom, looking at a chart provided by her loan servicer. It showed that she’d be 45 years old by the time she paid back her loans — and that she’d pay nearly $32,000 in interest. Overwhelmed, she burst into tears.
“I just didn’t understand the reality of my financial situation until I saw it in black and white,” Val says. “I didn’t understand how much interest I was paying — and the huge amount I could save if I paid [off my loans] early.”
That moment lit a fire under her, a fire that made her determined to not pay more than she had to. Here’s how Val paid off her loans in 34 months — while earning a $36,000 salary.
Racking up $42,126 of student loans
While Val had worked hard to save up $4,000 for her first car, it never occurred to her to save for college.
“I just thought if your parents don’t pay, financial aid pays,” she says. “[The amount] was so big that I didn’t even try. … I thought that was just what everybody did.”
She went to a public university in her home state of Wisconsin, where she earned both a bachelor’s degree and a master’s degree — and racked up $42,126 of student loans.
Looking back, Val says she had no idea what she was getting herself into. She didn’t know that she’d be earning only $36,000 per year after six years of school — and that after taxes, insurance, and retirement, her salary wouldn’t seem like much.
But the biggest thing Val didn’t understand? Compound interest.
“I didn’t understand that borrowing $50,000 would actually cost $100,000 if you drag it out for 20 years,” she says. “I didn’t understand what compound interest meant until it was slapping me right in the face.”
How Val tackled her massive student loans
Smartly, Val consolidated her high-interest Federal Direct Loans — and omitted two loans she’d taken out when interest rates were lower.
Here’s what she ended up with:
- One Direct Loan of $33,970.30 consolidated at 6.75%
- Two non-consolidated Direct Loans equaling $2,625.80 at 1.79%
- One Perkins Loan of $5,530 at 5.00%
Her servicer had put her on a 20-year repayment plan with a minimum payment of $250 per month.
But after plugging her numbers into a prepayment calculator, she realized paying an extra $200 each month could eliminate her student loans in just eight years — and save her about $20,000 in interest.
That spurred her into action. “Those were my numbers — my amount,” she says. “It wasn’t generic, so it really hit home for me.”
Once she graduated, Val didn’t even take advantage of the six-month payment grace period.
“As soon as I started getting my real paycheck, that was extra money I’d never had before,” she says. “I started throwing that at my debt right away, before interest even started accruing.”
How Val put half her income toward her student loans
She set up an automatic payment for $450 every month and threw any extra money at her debt: $25 here, $100 there.
“Anytime my bank account was more than $1,000 and I knew my bills were covered, I put whatever I could [toward my loans],” she says.
She’d been responsible for her bills since starting college — groceries, gas, cellphone, etc. — so she was used to a frugal lifestyle.
And she didn’t let that change once she started working as a public school counselor, a job that paid $36,000 per year — “way more,” she says, than her $10-per-hour job in college.
She and her now-husband cooked all their meals at home, used hand-me-down furniture, and drove old cars. And because she didn’t want to pay for a new phone or data, Val didn’t have a smartphone.
“I didn’t even have texting for a while because of the extra money I could save each month,” she says. “Man, did my friends tease me for that.”
Thanks to her frugality, she was able to put approximately half her income toward her loans. In two years, she paid off about $32,000.
Then she got married and merged finances with her husband (and paid for a destination wedding debt-free). Together, they paid off the remaining $10,000 in the following year.
“I thought when I hit the final submit button that confetti was going to start shooting out of my computer,” she says. “There wasn’t even a congratulations message, so I wondered if it really worked.”
For proof, she took a screenshot of the zero balance and added big red arrows and the words “Boom!!! Outta here, Sallie Mae!!”
She’d just paid off her loans — not in 20 years or eight years but in just 34 months. And she’d saved more than $27,000 in interest.
Val’s advice for others with student loan debt
Would you like to pay off your loans early, saving tens of thousands of dollars in the process?
I thought so. Here are Val’s four best tips.
1. Do the math
Val never would’ve paid off her loans as aggressively if she hadn’t seen the numbers. That’s why it’s essential to calculate both the monthly payment and the amount you’ll pay over the lifetime of the loan, she says.
“Once I was aware,” she says, “I couldn’t unlearn how much money I was wasting in interest.”
To see your own numbers — and how much you could save by paying early — check out our student loan prepayment calculator.
2. Consider refinancing
“One mistake I made was not refinancing,” says Val. “I had a pretty high interest rate, so that could’ve lowered my payments.”
If she’d qualified for refinancing, there’s a chance her interest rate would’ve dropped significantly.
But if Val had been seeking Public Service Loan Forgiveness (PSLF) or a similar program, it wouldn’t have been wise to refinance. She would’ve lost the ability to take advantage of certain federal programs and protections.
Unfortunately, she wasn’t able to go this route because her school didn’t qualify for PSLF.
3. Realize you’re not a victim
An important mental shift, Val says, is realizing you’re not stuck, that you’re not a victim to the loan.
“It doesn’t have to be normal to have that debt,” she says. “You can make choices and trim your budget and get rid of it, even on a modest salary.”
4. Remember your ‘why’
Why do you want to pay off your loans early? Is it so you can have freedom to travel? So you can start a business?
For Val, it was so she could be debt-free before having kids. Coming back to that reason, she says, motivated her to keep going when things got tough and she wanted to give up her ambitious mission.
So before you embark on a debt repayment plan, she urges you to think about “what you could do with that money — what you could do with your life.”
With her “why” as a guiding light, Val is now a stay-at-home mom to two kids.
“It would never be the case if we had debt payments,” she says. “I never would’ve thought that paying off my loans would lead to this; it’s a dream come true. I’ve heard others say they wish they could stay home but can’t afford it — and I know they’re making more money than we do. It can be done. … I hope this story’s an inspiration for the average Jane or Joe.”
Thanks to Val for sharing her story with us! If you want more of her advice, check out her book Pay Your Student Loans Fast.
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